Thursday, July 31, 2014

Turning Point?

Londoners Cashing in Flee to Suburbs as Home Rally Wanes

The slowdown in price gains and the prospect of realizing profit tied up in London homes could tempt wealthy foreigners to head elsewhere, economists say. Those who bought homes in the priciest districts of town in dollars, rubles, rupees or riyals during 2009 would double their money if they sold today, Hamptons' Morris said. "With the prospect of increasing interest rates, and resultant strengthening of the pounds, the temptation for overseas investors to cash in is getting bigger," Morris said.

Posted by mp @ 03:43 PM (2935 views)
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12 thoughts on “Turning Point?

  • Met up with my NCT a few months ago and almost all had moved out to zone 6 and beyond. They were all second steppers in their mid- to late 30s with very good jobs: doctors, lawyers, financiers etc. If they can’t afford to live in the inner suburbs, who can?

    The foreign question is one that continues to bother me. In some ways, I think we are going to have a perfect storm soon that will create a lot of capital flight, as the quote here suggests. Rising interest rates, an overvalued pound and even gently falling nominal prices, against a backdrop of increased taxation, would see a lot of foreigners sell up and leave. OTOH, they mainly bought in because they felt the pound was undervalued; they only pay CGT if they sell; the interest rates would have to rise elsewhere to entice their money away and, I suspect, many of them were always planning on holding for the long-term.

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  • stillthinking says:

    I wonder because you imagine that this exodus would push prices up in the country, but demand is nothing without money, if the exodus causes prices to fall in the capital, then prices in the country must fall as well because the buyers have less cash.

    Either way, prices high or low, I would like to move out of the capital for the simple reason that there is a level of pay which puts you into the 40% bracket for the last few months of the year. When you add rent, travel and tax, for those last few months you will only clear a couple of hundred.

    That is to say, what used to be considered the “London weighting” is now directly in the 40% band.

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  • they had all the same arguments in Ireland and Tokyo and hong kong…but as prices began to fall investors and speculators
    we amazingly no-where to be seen and prices fell 50-70% and more for flats

    London is okay in parts but some bits are really not very nice places to live…with the internet it amazes me people wouldn’t want to live in much cheaper areas

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  • whats quite amazing is how the guy in the article thinks he spotted something no-one else has!….me thinks the market was totally bailed
    out and hes been lucky as smart money was out of property on 2006/2007…though in hindsight those in the market have been smart..they have actually been extremely lucky

    things are turning and its already happening…its gonna shock the naive people who have bought in the last 2 years…£100k-£200k falls
    very quickly and 20 years to recover….psychologically depressing imo

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  • Stillthinking. Put that 40% cash into a pension and now get to collect it as a lump sum on leaving work.

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  • Taffee, did u catch that article a few weeks back about LVT in Japan? The article claimed that prices fell so much there because they introduced something like LVT (poorly, I might add; even now if you buy a property, it’s very hard to find out the tax liability).

    I’m all for LVT, but it puts the 99% falls you’re always alluding to in perspective.

    £800k flats/houses in London could easily shed £200k, but £300k flats aren’t about to. The reality is that there is a lot of cash floating around, and no end of people willing to back property. When the next fallout happens, the more liquid opportunists will buy back in before prices fall too far (25%+). That’s not to say there won’t be regions and property types hit harder than that, but nothing like 99% anywhere.

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  • Some London property bought at over £100 million could easily fall 90% as the extreme
    lunacy of prices is laid bare

    If the current economic policy is possible bailing out the reckless and shifting the prudent
    Then anything is possible

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  • @6 I don’t know if you have ever been in a property bear market propped…but you won’t see or hear
    From a developer/investor…..they disappear off the face of the earth

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  • reticent. I think a larger point is that if property falls that much, likely oil, etc. will fall in price and interest rates would collapse below zero, at least in the Eurozone, and remember, Euros can be used to purchase British property. Draghi has dabbled with negative rates and will want to experiment further to save his job.

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  • isn’t oil cheap at moment compared to a few years ago ?

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  • @T I suppose that’s not that infeasible.

    @Lib This negative rates nonsense is bunkum. We have had negative real rates for longer than anyone thought possible. Negative nominal rates are highly unrealistic. The only reason they have ever happened is because of bidding wars between pension funds that legally needed to hold bonds. If the rates on Isas went negative, there would be a run on the banks, so you can file that under “never going to happen”.

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  • Wow!

    Maybe this is the 70% crash you’ve all been dreaming about. At last. At LAST!!!!!

    Or, perhaps it’s not….and prices will never crash…..

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